Signaling, beliefs, and prosocial behavior

Giving is a major economic activity but little understood. Preferences defined over resource allocations alone cannot explain the sensitivity of giving to informational conditions such as the visibility of a decision or awareness that it is being made. Social image, self-image, or beliefs-based altruism---which is a concern for how one's actions impact the feelings of another person regardless of the impact on that person's physical well-being each may explain part of this sensitivity, but these motivations have not been adequately distinguished conceptually nor empirically. I present a model of a dictator with preferences over the allocation of resources, but also over an observer's beliefs about these preferences, which, under three different interpretations, can correspond to each of these motivations. I experimentally test the model's predictions, finding evidence in support of social signaling, but not self-signaling nor beliefs-based altruism. Finally, while concern for image is arguably the best explanation for previous experimental results, these explanations rely upon the non-standard assumption that the structure of the decision is not common knowledge. I present a more general model of an image-motivated decision-maker whose behavior influences the observer's awareness of the elements of her choice set. I show that this model can explain the observed behavior and discuss behavioral and welfare consequences of imperfect awareness.